Canada’s duty-free stores seeing ‘severe’ sales dip amid peak summer season. Here’s why

Summer months are normally the busiest for most of Canada’s border town businesses, but duty-free stores are facing a “severe” economic decline compared to pre-pandemic levels, a new report from the Frontier Duty Free Association (FDFA) released Thursday, shows.

Average sales decreases have floated around 45 per cent for July 2022, the report, released Friday, said. “These export stores were shuttered for nearly two years and were down over 95 per cent in sales during the full closure of the land border for over 18 months,” it added.

“The summer season usually means busloads of people, lineups of people coming over the border and we’re just not seeing the traffic,” Barbara Barrett, executive director of the FDFA, told Global News. “It just means that people aren’t coming.”

Jeff Butler, vice-president of a Thousand Islands Duty Free store in Lansdowne, Ont., says that though his business sits above the average, sales are still down by 35 to 40 per cent compared to pre-pandemic levels and the store is still feeling the disparity.

“We are certainly feeling the difference,” he said, speaking of the store located at the Thousand Islands International Border Crossing.

“We’re one of the few places that can only sell to people that cross the border. If people aren’t crossing the border, we cant make sales — and that’s where we are right now.”

According to the duty free association and some of the businesses it represents, the reason for the decrease in sales is because of the COVID-19 pandemic and its restrictions — specifically the ArriveCAN app.

“Traffic is not happening because of the ArriveCAN app,” said Barrett. “It’s hurting businesses and hurting border town communities.”

2:24 Concerns rise over ArriveCAN app potentially violating constitutional rights

Tania Lee, president of the Frontier Duty Free Association and owner of the Blue Water Bridge Duty Free in Point Edward, Ont., also says the “main reason” for the slow season is the ArriveCAN app.

“We at the duty-free store are helping people fill in the ArriveCAN app. We’re getting questions about the ArriveCAN app,” she told Global News. “It’s really confusing. And, you have people out there that may not understand how to navigate an app.”

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At Lee’s store, sales are also down 40 per cent compared to 2019. “These restrictions are continuing to harm border communities,” she said.

Although originally launched as a voluntary tool meant to assist border guards in determining if people were eligible to enter Canada in April 2020, ArriveCAN was later made mandatory for air travellers.

Then in March 2021, it was expanded to anyone crossing the border by land.

This measure was put in place at the land border as of May 2022. It only applies to travellers without a history of non-compliance.

The report from the FDFA points out, “Air travel has been allowed to resume in such high volume that our air infrastructure is struggling to process the number of travellers and unvaccinated travellers.”

But, on the other hand, land borders “are regulated at the expense of communities whose entire livelihood depend on the back-and-forth crossing of the Canada/US border.”

The association says it would like to see the ArriveCAN app no longer required but it’s also willing to work toward alternative solutions, including a suggested “recovery package.”

“We need financial help,” said Barrett, in terms of loan forgiveness and low interest rate loans. “We were closed for nearly two years. We’re asking for this in fairness.”

Although border businesses followed public health measures and federal recommendations when the pandemic began, they are now being “left behind” in recovery efforts, according to Barrett.

“Our retailers closed to protect Canadians and we deserve not to be left behind. These unnecessary border measures are killing a 40-year-old export sector and doing nothing to help keep Canadians safe,” she said in the report.

The FDFA has presented a suggested recovery package to the federal government in light of the fact that border traffic is being blocked on an ongoing basis.

COVID-19 benefit programs from the federal government came to an end on May 7.

These include the target wage and rent subsidy programs and the $300-per-week Canada Worker Lockdown Benefit.

The Tourism and Hospitality Recovery Program and Hardest Hit Business Recovery Program, also expired in May.

Those earlier programs involved government pay outs of more than $100 billion to businesses to help with wages, rent, mortgages and other expenses. An additional $7.4 billion was allocated for the replacement programs.

For Butler in Lansdowne, he would also like to see a “more normal” return the border.

“There is still significant confusion amongst many people about exactly what is needed to cross and that is ultimately affecting numbers,” he said.

“We’re ready to welcome visitors. We just need to tweak things.”

— with files from Global News’ Sean Boynton & Abigail Bimman